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Inter-Industry Wage Differentials: An Increasingly Important Contributor to Urban China Income Inequality

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  • Zhao Chen
  • Ming Lu
  • Guanghua Wan

Abstract

How significantly inter-industry wage differentials contribute to rising income inequality is an essential policy issue for transitional economies. Using regression-based inequality decomposition, this paper finds that inter-industrial wage differentials contributed increasingly to income inequality in urban China through 1988, 1995, and 2002, mainly due to rapid income growth in monopolistic industries. Factors such as region, education, ownership, occupation, and holding a second job also contribute increasingly to income inequality, while being employed the whole year and age have decreasing contributions. If China seeks to reduce urban income inequality, removing entry barriers in the labor market and breaking monopoly power in the goods market are essential policy prescriptions.

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File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-130.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-130.

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Date of creation: Mar 2010
Date of revision:
Handle: RePEc:hst:ghsdps:gd09-130

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Keywords: Inter-industry wage differntials; Income ineqality; Regression-based decomposition;

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References

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Citations

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Cited by:
  1. Zhao Chen & Ming Lu & Hiroshi Sato, 2009. "Social Networks and Labor Market Entry Barriers: Understanding Inter-industrial Wage Differentials in Urban China," Global COE Hi-Stat Discussion Paper Series gd09-084, Institute of Economic Research, Hitotsubashi University.
  2. Mehta, Aashish & Sun, Wei, 2013. "Does Industry Affiliation Influence Wages? Evidence from Indonesia and the Asian Financial Crisis," World Development, Elsevier, vol. 51(C), pages 47-61.
  3. Kwon, Ohyun & Fleisher, Belton M. & Deng, Quheng, 2011. "Evolution of the Industrial Wage Structure in China Since 1980," IZA Discussion Papers 5880, Institute for the Study of Labor (IZA).
  4. Vizer, David, 2011. "Behind the North-South divide: A decomposition analysis," MPRA Paper 28364, University Library of Munich, Germany.

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